Analysis outlines ‘dramatic change’ in MBL rule proposal
JULY 6, 2015 -- A “potentially dramatic change” in NCUA’s approach to regulating member business lending is outlined in its proposed rule on member business lending (MBL), according to an analysis of the proposed prepared by NASCUS.
The NASCUS analysis notes that the federal agency’s proposal comes at a time when the credit union system’s MBL portfolio has grown from $4 billion in 2000 to $51 billion in 2015 – and increase of 1,275%.
The analysis notes that NCUA characterizes its proposed rule as moving to “principle-based” regulation as opposed to the existing MBL rule, which contains thresholds and waivers that NCUA characterizes as “prescriptive.” The proposed rule would eliminate most of the existing regulatory thresholds and limits in Part 723, replacing those provisions with expanded requirements for policies, procedures, and oversight by credit union management and credit union directors, the analysis notes.
With respect to the seven existing NCUA-approved state specific rules, the agency offers three alternatives as to how to treat those rules going forward, and seeks feedback on which approach (or suggestions for an alternate approach) should be adopted for the final rule.